At this point, nearly everyone has heard of Theranos and former CEO Elizabeth Holmes. The story is the focus of a book, Bad Blood: Secrets and Lies in a Silicon Valley Startup, and was recently made into an HBO documentary called The Inventor: Out for Blood in Silicon Valley. We have all seen crises riddling the news on a daily basis: from politicians to financial institutions, and airlines to pharma, no two scandals are ever identical but there are core principles as to how a crisis should be handled.
Regardless of the magnitude of the problem at hand, crisis and issues management is only navigated properly when a firm and nimble strategy is deployed.
Theranos is just one of the biggest — and more recent — examples of poor crisis management, highlighting a lack of strategy behind their actions. To recap, the health-tech company tugged at patients’ heartstrings, making outlandish — but inspiring — claims that they could, and would, change the face of health care. Patients across the country waited in awe for Theranos to come to market and ease the process of blood draws and testing.
After years of speculation, John Carreyrou, a Wall Street Journal investigative reporter, published the news of Theranos’ misleading claims of its “breakthrough advancements.” At the time, the company focused more on catering their message and efforts toward investors versus patients and the court of public opinion.
Theranos reacted without a plan. Their lack of strategy was clear. Their instinct was to hold tight, project confidence to their investors, and keep a keen eye on the flow of money. But, they forgot to consider public perceptions.
The Wall Street Journal reporter’s piece eventually led to further investigative coverage and DOJ indictments, which then resulted in more and more negative coverage.
Had Theranos taken the time to focus on the media narrative and public perceptions, or put forth an effort to apologize to patients affected and navigate their own internal communication struggles from the onset, there is a chance the scandal would not have reached its level of infamy.
Digging deeper into the reported conversations between the Theranos whistleblowers and Carreyrou (both in Bad Blood and The Inventor), it became clear that it wasn’t just the lack of science backing Elizabeth Holmes’ claims, nor her intent to fraudulently take over Silicon Valley, that were fascinating to those of us in the PR industry — it was everything that could and should have been done differently.
So, what can we learn from Theranos — one of the most notorious, fraudulent scandals in recent U.S. history?
- Define your message and stick with it. Too often, when interviewed or questioned in a public setting, Elizabeth Holmes or her business partner, Sunny Balwani, would alter their responses and the data shared — giving listeners, readers and viewers mixed and inconsistent messages.
- Engage the right audiences. With a focus on messaging exclusively to investors, Theranos left communications to patients and the media (who help define public opinion) out of its strategy.
- Ensure you communicate internally before externally. When issues were flagged up the chain, Theranos employees were threatened with job termination or scolded publicly in front of colleagues. As issues started to boil in the media, Theranos remained hushed with employees and brushed off queries or concerns. (Cue: the whistleblowers.)
- Choose a voice that will resonate. Though Elizabeth was trusted in the beginning by investors, employees, doctors and prospective patients, the moment negative buzz initiated, she started to lose her footwork because her intentions seemed clouded by success, not patient care. Once trust is lost, it is near impossible to get it back — especially in today’s news cycle, where every word counts. This was the final step to push America into protest and action, and ultimately, the demise of Theranos’ legitimacy.
Messaging, proper audience engagement, internal communications and a trusting voice are the foundation of an actionable strategy. With all four lacking from Theranos’ rise and fall, it became inevitable the company could neither escape the law, nor the court of public opinion.
However, the company’s lack of strategy leading up to, during and following the scandal, allow us PR practitioners to keep an even closer eye on the tactics needed to solve any issue, deal with any risk and prepare for any crisis.